NEW YORK CITY — With both domestic and international travel numbers on the rise, industry leaders gathered at the 2023 NYU International Hospitality Industry Investment Conference for two panels over two days to share insights on travel trends and how new normals will affect hospitality worldwide.
As The CEOs Check In: A View From The Top panel got underway on the first day of the conference, Anthony Capuano, president and CEO of Marriott International, said that if anyone in the room had questions about the resilience of travel, the questions had been answered. “If you've listened to any of our earnings calls, we've all seen business come roaring back across geographies, across business segments,” he said. “We’re well ahead of where we were pre-pandemic.”
Significantly, he added, the “phenomenon” of customer spend shifting from “hard goods” to experience is expanding across generations. “And we don't really see any slowdown, even in the face of some pretty troubling economic headwinds. Forward bookings look pretty compelling.”
The hospitality industry faced more headwinds during the pandemic than “probably” any other, IHG Hotels & Resorts CEO Keith Barr added, but it now has more tailwinds than any other industry, “especially with the global recovery.”
Crossing Borders
The strength of international travel after years of restrictions at borders is likely to help hotels worldwide. Sébastien Bazin, chairman and CEO of Accor, noted the growth of India as an emerging outbound market as its middle class becomes larger (Bazin estimated the segment to be about 500 million strong) and willing to travel further. “Those 500 million would go five hours away [to] Southeast Asia [or the] Middle East,” he said. “If you get 10, 20, 30, 70 million of them, it's a game changer for the industry.”
This may be a vital market as outbound travel from China has not caught up to its pre-pandemic levels. In April, Capuano said, cross-border airlift in and out of China was only restored to about 40 percent to where it was before the pandemic. “So there's still 60 percent recovery in cross-border airlift capacity in and out of China.” Christopher Nassetta, president and CEO of Hilton, suggested this may ease in the second half of the year, but for now, he believes the Chinese government is hoping to boost the economy with domestic customer spending.
Since China was the largest outbound market before COVID, Barr said he has “every confidence” it will be the largest outbound market again. And the experience of catering to outbound Chinese travelers can prepare the global industry for the outbound Indian market. “You're going to have a significant outbound travel impact on this industry for years to come.”
Mark Hoplamazian, president and CEO of Hyatt Hotels Corp., described Europe as being “on fire” in terms of travel trends, with business travel across the region tracking ahead of 2019 levels.
Leslie Hale, president and CEO of RLJ Lodging Trust, noted that international travel goes both ways, and pent-up demand from U.S.-based travelers will have an impact on leisure numbers at hotels worldwide.
Group and Business
While leisure demand is “normalizing as expected,” Hale said that she was encouraged by midweek booking trends and interest from national accounts from a business travel perspective.
“When COVID hit, there were all these prognosticators that travel was forever changed, that business travel was dead,” Barr said. While leisure travel has outpaced business travel in terms of recovery, travel is one of the last things businesses want to stop spending on. “We're on the road more now than we were probably in 2019, reconnecting with customers and developers all around the world today. And we're seeing that happen in so many different industries, too.”
Leadership and ESG
On the second day of the conference, a different set of leaders gathered to discuss new demands, including sustainability and environmental, social and governance policies.
Michael Deitemeyer, president and CEO of Aimbridge Hospitality, said demand for sustainable hospitality is driving operators and brands alike to seek out partnerships and solutions. Through a partnership with Ecolab, he said, hotels in Aimbridge’s portfolio saved 200 million gallons of water in 2022. Over the next two years, he added, 40 percent of the property owners Aimbridge works with will be investing in sustainability.
“There's another perspective as well,” Larry Cuculic, president and CEO of BWH Hotels, added. “If we don't manage ESG [policies], governments will do it for us. So we either self-regulate or the government will regulate.”
Michael Brown, president and CEO of Travel + Leisure Co. (which includes the Wyndham Destinations timeshare program) said that operating as a homeowners association lets the team determine their ESG initiatives. The company has a board of both tenured and new members to determine policies going forward, and these members offer both experience and new perspectives to ESG matters. “And if it doesn't get us a perfect score, that's okay because we're getting good board leadership and board management insights to run the company.”
Hiring has been “tough,” said Greg Juceam, president and CEO of Extended Stay America, noting that the company has between 800 and 900 positions open across the country. When thousands of Afghan refugees were brought to ESA properties in need of lodging, the company found a good solution. “They wanted to work, and we had openings.”